Third-party inspection certificates — reducing the risk of international sales
By Nicholas Walser
For anyone purchasing goods of any kind, the most important question is: ‘Am I getting the product that I have agreed to pay for?’ No buyer wants to part with the price and then find that they have bought something that is of poor quality or unsuitable for its intended purpose.
In international sales, where the buyer and seller may be on opposite sides of the world, having the right to claim a refund later may be of little practical use to the buyer, and they cannot easily go and check the quality of the goods in person either. International purchase contracts should therefore stipulate that the price is payable on sight of an inspection certificate issued at the point of shipment by an independent third-party inspection agency. Where payment is made by letter of credit, these certificates are also usually included in the documents that must be presented to the buyer’s bank in exchange for payment.
This is an important protection for the buyer. But an inspection certificate may also protect the seller against any liability if the buyer later discovers that something is wrong with the goods. If the contract provides for payment on sight of an inspection certificate, it may also state that the certificate is to be final and binding. In other words, if the seller produces a valid certificate confirming that the goods meet the agreed specifications, this is conclusive and the seller has no further responsibility. There are ways for buyers to get round this problem but it depends on the precise terms of the contract, and of the certificate itself. For example, if the certificate is to be ‘final as to quality’ it may not protect the seller if they have supplied goods of the wrong description. Or if the contract requires the goods to be tested using a particular test method, the certificate will not be binding if the wrong method has been used. Both of these arguments have been upheld in the past by the English courts…
Click on the link below to read the rest of the Gateley briefing.
Sign in or Register to continue reading this article
It's quick, easy and free!
It takes just 5 minutes to register. Answer a few simple questions and once completed you’ll have instant access.Register now
Why register to The Lawyer
In-depth, expert analysis into the stories behind the headlines from our leading team of journalists.
Identify the major players and business opportunities within a particular region through our series of free, special reports.
Receive your pick of The Lawyer's daily and weekly email newsletters, tailored by practice area, region and job function.
More relevant to you
To continue providing the best analysis, insight and news across the legal market we are collecting some information about who you are, what you do and where you work to improve The Lawyer and make it more relevant to you.
News from The Lawyer
Briefings from Gateley Plc
Lessees will be required to recognise assets and liabilities for all identified leases.
Challenge to the very basis of the no-win no-fee costs regime.
Analysis from The Lawyer
Gateley bigshots see personal wealth soar on flotation, but face penalties for early exit .
Gateley is to float on the London Stock Exchange, becoming the first UK firm to list itself as a public limited company. But why would a firm would look to float, and what it could mean for the industry?